Southwest Changes Course With New Rewards Program

When Southwest's newly announced loyalty program comes online on March 1, it will fundamentally change the airline's marketing focus, and the way it's perceived by the traveling public.

For some, the new Rapid Rewards will be the long longed-for replacement for a program that hasn't kept pace with the airline's growth from a scrappy discounter to the country's largest carrier, as measured by annual flyers.

For others, it will be a jarring dislocation, a repudiation of the LUV-y corporate persona that's been integral to Southwest's success, and a thumb in the eye of millions of travelers who embraced the airline's folksy ways.

Of course, Southwest would have it both ways, retaining its proven base while expanding into untapped markets. But having their cake and eating it too may be like, well, having their cake and eating it too.

Business Travelers Are New Focus

Southwest has made no secret of its plans to ramp up profits with a vigorous pursuit of the business-travel market.

To date, that new focus has mostly been apparent in the introduction of higher-priced fares targeting business flyers: Anytime fares, with no restrictions on flight changes or refunds; and "Business Select" fares, featuring perks such as priority boarding and a free drink coupon.

But those new offerings had little impact on the airline's leisure flyers.

That will change with the launch of Rapid Rewards 2.0, when the fault lines between the airline's established leisure travel constituency and the newly sought business flyers will become glaringly apparent.

New Program Rewards Spending

The new program boasts two uncontroversial positives: award seats that aren't constrained by capacity controls or blackout dates — any seat available for sale can also be had for points; and an expiration policy that allows the validity of points to be extended indefinitely.

Both features represent significant improvements over the current Rapid Rewards program. But the new program's system for recognizing and rewarding Southwest customers has caused concerns.

Southwest's New Rewards Program Controversial

Unlike the programs of most of the world's largest airlines, which dole out miles and awards based on the number of miles flown, Southwest's new program will award points on the basis of two factors: ticket price, and fare type.

Instead of the current earning regimen of one credit for every flight, regardless of length or ticket price, Rapid Rewards members will earn 12 points per $1 for Business Select tickets, 10 points per $1 for Anytime tickets, and six points per $1 for the carrier's cheapest fares, called "Wanna Get Away" tickets.

The new program will also have two elite tiers—A-List, earned after 25 one-way flights, and A-List Preferred, earned after 50 one-ways—that award 25 percent and 100 percent earning bonuses, respectively.

So an A-List Preferred member will earn 25,200 points after three $350 Business Select flights, enough for a $420 Wanna Get Away award ticket.

But to earn that same award ticket, a leisure traveler — traditionally Southwest's core market — would have to purchase 17 $250 Wanna Get Away tickets.